Chicago | Reuters — U.S. feeder cattle futures rose to nearly four-month highs on Monday as declining feed prices boosted demand for the variety of cattle fattened and then sold to beef packers.
Live cattle futures, reflecting the animals already fattened for slaughter, were narrowly higher while lean hogs were widely mixed on the Chicago Mercantile Exchange.
CME August feeder cattle settled up 0.6 cent at 151.925 cents/lb., the highest since March 8 (all figures US$). Several deferred feeder cattle contracts notched even bigger gains, with thinly traded contracts for 2019 hitting lifetime peaks.
CME August live cattle were up 0.175 cent to 106.9 cents/lb., the highest closing price since March 20.
Cattle prices climbed as prices for corn sank to life-of-contract lows on the Chicago Board of Trade. Corn prices dropped in part due to good growing conditions in the U.S. Midwest.
When animal feed prices decline, costs are reduced for feedlot operators, often resulting in better demand. At a closely watched weekly feeder cattle auction in Oklahoma City, feeder steer prices were up $5 to $8 per cwt and demand was described as good, according to the U.S. Department of Agriculture.
Both feeder and live cattle prices climbed sharply late last week amid investment fund buying.
Lean hog prices were mixed on Monday. Most-active August hog futures tumbled 2.075 cents to 74.375 cents/lb. even as July futures were up 0.325 cent to 83.2 cents.
Some hog contracts fell due to fear that Mexico, the top importer of U.S. pork, could bring in fewer supplies due to tariffs imposed on some pork cuts, according to U.S. Commodities analyst Don Roose.
“We had a new election in Mexico and the feeling is that is going to make it tougher to negotiate NAFTA,” Roose said, referring to the North American Free Trade Agreement. “The (U.S.) administration is already pushing it back to November.”
In an interview with Fox News on Sunday, President Donald Trump said he would complete a new NAFTA trade deal with Mexico and Canada until after the November congressional elections.
The winner of Mexico’s presidential election, Andres Manuel Lopez Obrador, said on Monday that he will be respectful of the current government’s NAFTA negotiators and that his transition team will seek to join the trade talks.
— Michael Hirtzer reports on commodity markets for Reuters from Chicago; additional reporting by Julie Ingwersen in Chicago.